City & FFP | 2020/21 Accounts released | Revenues of £569.8m, £2.4m profit (p 2395)

[Gary James]

Re: City & FFP (continued)

To use an analogy I've used before, it's like going into an two part exam and being told you need an aggregate 70% or more to pass. You know you're going to do better on the second part so you don't really concentrate on the first part & get 65%. You then get 85% on the second so come out thinking you've passed comfortably, only to be told at the end that there has been some confusion and that you need to get at least 70% on each part, therefore you've failed.

I was fortunate to be a guest at the West Yorks branch of the supporters club this week and Prestwich Blue was the other guest. Personally, I thought it was very interesting what he said about FFP and I would urge other supporters club branches to get him along as a guest because he really has investigated and reviewed this with a passion. For many of us the numbers and minor details are not particularly enthralling, however as he has researched and understood this area for some time now I believe he can provide a much clearer view of where we're at and why we're there than words on a thread or in an article can. He's also happy to give his own views which is always interesting (and informed).

I've interviewed some of the key people involved over the last few years, but I've never tried to get into the specifics of how many pounds were here or what £80m clause was there etc. but Prestwich Blue has and he's well worth listening to about it. It's a difficult subject to write about but when someone who has 'lived it' for some time can talk about it then it does make more sense.

 

[George Hannah]

Re: City & FFP (continued)

To use an analogy I've used before, it's like going into an two part exam and being told you need an aggregate 70% or more to pass. You know you're going to do better on the second part so you don't really concentrate on the first part & get 65%. You then get 85% on the second so come out thinking you've passed comfortably, only to be told at the end that there has been some confusion and that you need to get at least 70% on each part, therefore you've failed.

I was fortunate to be a guest at the West Yorks branch of the supporters club this week and Prestwich Blue was the other guest. Personally, I thought it was very interesting what he said about FFP and I would urge other supporters club branches to get him along as a guest because he really has investigated and reviewed this with a passion. For many of us the numbers and minor details are not particularly enthralling, however as he has researched and understood this area for some time now I believe he can provide a much clearer view of where we're at and why we're there than words on a thread or in an article can. He's also happy to give his own views which is always interesting (and informed).

I've interviewed some of the key people involved over the last few years, but I've never tried to get into the specifics of how many pounds were here or what £80m clause was there etc. but Prestwich Blue has and he's well worth listening to about it. It's a difficult subject to write about but when someone who has 'lived it' for some time can talk about it then it does make more sense.

he said we shouldn't worry but to be fair so did Soriano.

 

[Matty]

Re: City & FFP (continued)

To use an analogy I've used before, it's like going into an two part exam and being told you need an aggregate 70% or more to pass. You know you're going to do better on the second part so you don't really concentrate on the first part & get 65%. You then get 85% on the second so come out thinking you've passed comfortably, only to be told at the end that there has been some confusion and that you need to get at least 70% on each part, therefore you've failed.

I was fortunate to be a guest at the West Yorks branch of the supporters club this week and Prestwich Blue was the other guest. Personally, I thought it was very interesting what he said about FFP and I would urge other supporters club branches to get him along as a guest because he really has investigated and reviewed this with a passion. For many of us the numbers and minor details are not particularly enthralling, however as he has researched and understood this area for some time now I believe he can provide a much clearer view of where we're at and why we're there than words on a thread or in an article can. He's also happy to give his own views which is always interesting (and informed).

I've interviewed some of the key people involved over the last few years, but I've never tried to get into the specifics of how many pounds were here or what £80m clause was there etc. but Prestwich Blue has and he's well worth listening to about it. It's a difficult subject to write about but when someone who has 'lived it' for some time can talk about it then it does make more sense.

he said we shouldn't worry but to be fair so did Soriano.

I'd suggest both of those statements were based upon the guidance UEFA had given originally, and which would have seen us pass FFP. It was only when UEFA changed their guidance at the 11th hour that we needed to worry, as it was then beyond our control whether we passed or failed.

What happened between City and UEFA, when looked at in hindsight, is pretty cut and dried. UEFA introduced FFP, and during the whole period up to the present day people have assumed that Manchester City FC will fail FFP and will have some form of punishment handed out to them, and I include UEFA in this. You can imagine UEFA's dismay when, based upon the FFP rules (which were set in stone at this point, and couldn't be changed) and UEFA's guidance on how to interpret those rules (which was not set in stone, and allowed UEFA some wiggle room) they realised that Manchester City would actually pass FFP, and would not be sanctioned. Simply put UEFA needed Manchester City to fail FFP, they needed a high profile victim to prove the rules weren't toothless and irrelevant. If Manchester City had been allowed to pass FFP, despite announcing, in real terms, in the region of £150m of losses over the 2 year assessment period, UEFA would have looked like a laughing stock, and would have been torn to pieces by the very clubs that helped to design the FFP rules to catch clubs like Manchester City in the first place.

Faced with this potentially damaging outcome UEFA did the only thing they felt they could do, in the absence of the ability to actually change the FFP rules during the assessment period (which would have been highly illegal) they took the option of changing the guidance on exactly how those rules should be interpreted (which too was dodgy, but less so). This meant that Manchester City, having already submitted their accounts for the first of the 2 assessment periods, could do nothing to amend their accounts based on the new guidance. They found themselves, through no fault of their own, going from the situation they thought they were in, which was having passed FFP, to having failed FFP, and by a figure north of £100m. That is a HUGE swing in terms of impact from what was a very minor amendment to guidance on how a rule should be applied.

This was why Manchester City's owners were so livid about the outcome of the FFP assessment, and this was why the "settlement" period was so protracted and complex. UEFA knew what they'd done, Manchester City knew what UEFA had done, and more importantly UEFA knew Manchester City were fully aware what UEFA had done, and why. UEFA had to balance punishing Manchester City to a degree that, on paper, looked substantial against the risk of Manchester City taking this issue out of UEFA's hands and appealing against the last minute bodge job they'd done. What we got, in the end, was UEFA giving some and offering Manchester City a set of sanctions that weren't as draconian as ones they'd have likely wanted to force upon us, and Manchester City giving some as we accepted a punishment when we ideally wanted no such thing.

 

[FanchesterCity]

Re: City & FFP (continued)

I expect FFPR will be a moving goal post every year - not that UEFA have gone down this path, it's set up a game of cat and mouse between UEFA trying to police matters, and clubs being creative in their business dealings.

I use the term 'creative' genuinely - as most clubs will try to create innovative revenue streams, or one off deals in order to comply with FFP, and UEFA will then have to take on view on those new revenues.

It's going to cause an awful lot of trouble when a club (whoever it is) comes up with a great innovative way to increase revenue and UEFA just say 'oh we don't much like that idea, we'll ban it', whilst another club has their own scheme and UEFA happens to like that one, and approves it. How is that going to be fair? it might have taken a club a number of years to create this new revenue stream / deal. And, since it'll be innovative, it's going to be hard to put any market value on it.

It will also be interesting to see what MIGHT happen should there be a drop in revenue across the board for PL (or any other league). For instance, as things stand, clubs assume the TV money will keep coming in - but there might come a day when it collapses, or there might be an economic crisis that sees most clubs suffer financially....

IF that happened, and it caused multiple clubs revenues to suddenly plummet, would UEFA still uphold the regs, or would they class this is a special circumstance and waive matters?

 

[FanchesterCity]

Re: City & FFP (continued)

I was fortunate to be a guest at the West Yorks branch of the supporters club this week and Prestwich Blue was the other guest. Personally, I thought it was very interesting what he said about FFP and I would urge other supporters club branches to get him along as a guest because he really has investigated and reviewed this with a passion. For many of us the numbers and minor details are not particularly enthralling, however as he has researched and understood this area for some time now I believe he can provide a much clearer view of where we're at and why we're there than words on a thread or in an article can. He's also happy to give his own views which is always interesting (and informed).

I've interviewed some of the key people involved over the last few years, but I've never tried to get into the specifics of how many pounds were here or what £80m clause was there etc. but Prestwich Blue has and he's well worth listening to about it. It's a difficult subject to write about but when someone who has 'lived it' for some time can talk about it then it does make more sense.

he said we shouldn't worry but to be fair so did Soriano.

I'd suggest both of those statements were based upon the guidance UEFA had given originally, and which would have seen us pass FFP. It was only when UEFA changed their guidance at the 11th hour that we needed to worry, as it was then beyond our control whether we passed or failed.

What happened between City and UEFA, when looked at in hindsight, is pretty cut and dried. UEFA introduced FFP, and during the whole period up to the present day people have assumed that Manchester City FC will fail FFP and will have some form of punishment handed out to them, and I include UEFA in this. You can imagine UEFA's dismay when, based upon the FFP rules (which were set in stone at this point, and couldn't be changed) and UEFA's guidance on how to interpret those rules (which was not set in stone, and allowed UEFA some wiggle room) they realised that Manchester City would actually pass FFP, and would not be sanctioned. Simply put UEFA needed Manchester City to fail FFP, they needed a high profile victim to prove the rules weren't toothless and irrelevant. If Manchester City had been allowed to pass FFP, despite announcing, in real terms, in the region of £150m of losses over the 2 year assessment period, UEFA would have looked like a laughing stock, and would have been torn to pieces by the very clubs that helped to design the FFP rules to catch clubs like Manchester City in the first place. Faced with this potentially damaging outcome UEFA did the only thing they felt they could do, in the absence of the ability to actually change the FFP rules during the assessment period (which would have been highly illegal) they took the option of changing the guidance on exactly how those rules should be interpreted (which too was dodgy, but less so). This meant that Manchester City, having already submitted their accounts for the first of the 2 assessment periods, could do nothing to amend their accounts based on the new guidance. They found themselves, through no fault of their own, going from the situation they thought they were in, which was having passed FFP, to having failed FFP, and by a figure north of £100m. That is a HUGE swing in terms of impact from what was a very minor amendment to guidance on how a rule should be applied. This was why Manchester City's owners were so livid about the outcome of the FFP assessment, and this was why the "settlement" period was so protracted and complex. UEFA knew what they'd done, Manchester City knew what UEFA had done, and more importantly UEFA knew Manchester City were fully aware what UEFA had done, and why. UEFA had to balance punishing Manchester City to a degree that, on paper, looked substantial against the risk of Manchester City taking this issue out of UEFA's hands and appealing against the last minute bodge job they'd done. What we got, in the end, was UEFA giving some and offering Manchester City a set of sanctions that weren't as draconian as ones they'd have likely wanted to force upon us, and Manchester City giving some as we accepted a punishment when we ideally wanted no such thing.

I suspect much of this is along the right lines, but it's hard to be certain precisely which parts.
Whatever new interpretations UEFA chose to put on things, they would have to be mindful of not dropping anybody body else (they didnt want to upset) in the myre.
And there's still the issue of why City didn't take account of any unfavourable interpretation that UEFA might put on matters.

But I still think the general gist is about right, and UEFA needed to show some teeth. They were unlikely to do it against the established elite clubs, and exercising sanctions against only clubs from the lesser nations would have been seen as running scared. City, Chelsea and PSG are the three obvious 'new money' clubs with high profile. Chelsea obviously benefitted from having most of their investment and growth prior to FFP being mooted, leaving City and PSG.

I don't think UEFA wanted a legal battle, and for that matter, why would City? it's bad PR all round, and even if City won, nobody would be applauding them. It would have been portrayed as having bought the best legal team too and sticking two fingers up to any notion of FFP.
The outcome (so far) seems decent. UEFA keep face, and City don't suffer especially, but just as importantly, City will then be deemed as having complied and 'put back on track' by UEFA, whilst City no longer look like flat track financial bullies riding roughshod over FFP.

 

[Silva Citizen]

Re: City & FFP (continued)

Is it just me or is there one post on every page (certainly recent pages) that is not displaying correctly

 

[FanchesterCity]

Re: City & FFP (continued)

Is it just me or is there one post on every page (certainly recent pages) that is not displaying correctly

All looks ok here!

 

[roaminblue]

Re: City & FFP (continued)

But I still think the general gist is about right, and UEFA needed to show some teeth. They were unlikely to do it against the established elite clubs, and exercising sanctions against only clubs from the lesser nations would have been seen as running scared. City, Chelsea and PSG are the three obvious 'new money' clubs with high profile. Chelsea obviously benefitted from having most of their investment and growth prior to FFP being mooted, leaving City and PSG.

I don't think UEFA wanted a legal battle, and for that matter, why would City? it's bad PR all round, and even if City won, nobody would be applauding them. It would have been portrayed as having bought the best legal team too and sticking two fingers up to any notion of FFP.
The outcome (so far) seems decent. UEFA keep face, and City don't suffer especially, but just as importantly, City will then be deemed as having complied and 'put back on track' by UEFA, whilst City no longer look like flat track financial bullies riding roughshod over FFP.

I think this is key. This whole "letter" saga, Platini's comments not to long ago about the established clubs contacting him (etc), reeks of an institution that is both i) willing to secure its future by pandering to the requests of the clubs-in-power of the times ii) and believes, probably rightly, that as a sporting institution their actions will not face a great deal of scrutiny from any European courts. To my, albeit limited, understanding; the letter that has been posted on here, and the comments by platini himself reeks of anti-trust. I really don't think in an industry of business-proper, that sort of cartel management and posturing would not fall heavily under the scrutiny of anti-competitive action.

I'm sure its been mentioned countless times, but my frustration will continue to be capital structure and equity vs debt. We've seen minimum capital requirements enforced within the banking industry, leverage ratios (etc) all actions designed to try and make sure banks aren't over exposed, and client money not put unduly at risk. It would be so simple (to give a crass example) to place a maximum leverage ratio on the clubs, perhaps debt to operating income, and for any spending above and beyond, the club must ensure that the spending is equity only.

But as has been said countless times on here, it really isn't about the spending, is it. Its about protectionism.

 

[roaminblue]

Re: City & FFP (continued)

Is it just me or is there one post on every page (certainly recent pages) that is not displaying correctly

before I logged in, there was a post every page squeezed to the left because of advertising, is that the problem?

 

[FanchesterCity]

Re: City & FFP (continued)

I'm sure its been mentioned countless times, but my frustration will continue to be capital structure and equity vs debt. We've seen minimum capital requirements enforced within the banking industry, leverage ratios (etc) all actions designed to try and make sure banks aren't over exposed, and client money not put unduly at risk. It would be so simple (to give a crass example) to place a maximum leverage ratio on the clubs, perhaps debt to operating income, and for any spending above and beyond, the club must ensure that the spending is equity only.

But as has been said countless times on here, it really isn't about the spending, is it. Its about protectionism.

Indeed.
Originally it was all about stopping clubs from over stretching and going bankrupt. Fair enough.
Then it morphed into stopping sugar daddy clubs spending - (and conveniently trying to suggest that this caused other clubs to overstretch!)
Now it's morphed again into a 'buying power' competition. There's nothing wrong with the spending now - but only if you're already a huge club. Upstarts aren't allowed.

Surely, UEFA could insist on some escrow arrangement where clubs GUARANTEE their transfer fees and wages etc, and those don't impose risks on a club should they sell up.
If everything goes pear shaped for United, they could have difficulty servicing their debt (unlikely but possible). And yet if it goes pear shaped for us, we'll only go back to where we were (but with improved facilities - which we could enjoy, or sell).

UEFA and especially the elite clubs craved all this money coming into the game, only they anticipated it would all go to them. They didn't anticipate their 'closed shop' strategy would force rich investors to look at alternative clubs (like City and PSG).